If you owe over $51,000 in taxes, your vacations might be confined to the United States for a while. A 2015 law requires the IRS and State Department to deny passports to those with over $51,000 in outstanding, overdue tax debt, and over 362,000 Americans fall under this category. Working closely with the IRS, who provide names of those with outstanding debt, the State Department has already denied several passports under the law. While the regulation will prevent you from obtaining a new passport, or renewing an existing passport, it will not revoke up-to-date passports.
One of the law’s chief objectives is to incentivize Americans to pay their taxes, though it only seems to be working on a small scale. As of late June 2018, 220 people paid over $11.5 million in owed taxes to settle their debts in full, while 1,400 others set up payment plans to reduce their debts. IRS Division Commissioner Mary Beth Murphy told the Wall Street Journal that one debtor paid $1 million in tax debt specifically to avoid passport denial. That still leaves hundreds of thousands of Americans with outstanding debts, and some uncertainty surrounding the law’s effectiveness.
Critics of the plan argue that debtor notices often arrive at the same time as the State Department is notified of the debt, leaving an insufficient window of time for taxpayers to resolve their debt before passport denial.
While we can all probably agree that paying your taxes should be a priority, a threat to international vacations could be the motivation some people need.